“Rental rates increase, I think generally, in an upward economy,” said Bennett Borsuk, director of Ann Arbor’s Cabrio Properties. “Right now, the demand is higher than supply, and that’s what’s allowing this to happen.”

The National Association of Realtors predicts apartment rates in the U.S. will increase by 4.6 percent in 2013, compared with 4.1 percent this year. If you pay $600 in rent, that equates to about $28.

According to local landlords, several factors in Ann Arbor could cause even higher rate increases. Among them:

There is a shift in housing culture where people are choosing to rent rather than buy.

City ordinances have placed stricter and more costly requirements on rental properties.

Also at play is that for the past three or four years, many landlords experienced declining or stagnant rents when the housing bubble burst. This year and looking into next year, apartment owners are finding it possible to increase rates.

“Our rents were pretty flat and in some locations, actually went down since 2008,” said Amy Khan of CMB Property Management in an email, “but in the past two years, we have seen a higher demand and ability of our residents to afford an increase in rates.”

Renters move out of an apartment in Ann Arbor during the summer.

Melanie Maxwell | AnnArbor.com

Landlords say Ann Arbor rent increases in 2013 will range from 0 percent for renewables to 15 percent or higher. Most increases are in the 4 percent to 7 percent range.

“Mostly all of our rental rates on non-renewables are definitely increasing,” Borsuk said.

Because Cabrio specializes in buying distressed properties and turning them around, Borsuk said rate increases for a recently acquired property could reach 10 percent to 15 percent.

“A lot of times, the reason we’re buying properties is because rents were too low to begin with and there’s opportunity there. As a landlord, you’re looking to purchase properties that have rents below market,” he continued.

McKinley CEO Albert Berriz said rental rates across McKinley’s 25-state platform are increasing an average of 10.4 percent in 2013, and the Ann Arbor average is consistent with that. Like Cabrio’s, that figure includes recently acquired properties — like the Ironwood Place apartments — and renovated projects.

“This year we just crossed the line from 2008,” Berriz said. “Basically, what it comes down to is 2012 was the first year where rents are higher than 2008 rents. We’re just seeing that recovery.”

So what does this mean for the local apartment shopper?

Chris Heaton, owner of Campus Management Inc., said renters are getting a better experience since many landlords have started improving their properties to get higher returns.

“There’s a lot of new development coming online, and I think there are a lot of mom-and-pop landlords who are feeling pressure to modernize their offerings, whether it’s putting in a new kitchen and bathroom or updating appliances."

“If (a landlord) is going to do those improvements, they’re going to advance their rent,” he continued.

He also pointed out that many landlords, hoping people will renew their leases, will charge minimal or no rate increases if a renter is renewing a lease. Renewals are attractive because they eliminate the turnover cost for landlords, Borsuk said.

Heaton said Campus Management “aggressively incentivizes” renewals in the form of a modest rental rate increase. Rate increases at his properties will range from 1.5 percent to 6 percent for 2013, he said.

But for renters who aren’t looking to renew, rate increases combined with other factors could cause people to look outside Ann Arbor or Washtenaw County for less expensive housing.

“Washtenaw County is among the most expensive housing markets in Michigan,” said Mary Jo Callan of Washtenaw County’s Office of Community Development. “That’s great; it means income is high and the economy is robust. The downside is the folks who we rely on to work at our businesses, especially retail they can’t afford to live in our market.”

Although specific data isn’t available on average rental rates in Washtenaw County, Callan said there is a “typical dynamic” of people working in Ann Arbor and commuting from other parts of the county.

She said the number of Washtenaw County residents living in affordable housing units also is on an upward trend, with thousands of residents identifying a need for affordable housing.

“It’s great for the global and local economy, but what (rental rate increases) mean are there are fewer options for folks who are lower income and poor,” she said.

“The lower end of the housing market is already taken by those who can afford more but are making smart choices for their budget. Then, there’s that many fewer units for folks who simply can’t spend more,” she continued.

Comments

Polyjuce123

Sat, Dec 29, 2012 : 2:15 a.m.

No secret here, someone caught on to the trend of decreasing home ownership... namely feasting their eyes on the oppressed and unemployed generation y which continues to sit in the shadow of the massive group of baby boomers not ready to retire anytime soon. This trend is disturbing as it is sad, as it continues to further oppress young adults. Marketers are well aware the damage that the 08 recession inflicted, primarily on newly minted college grads who were knocked off the ladder and out of the door to make way for many boomers to come out of retirement and re assume their titles. As home loan credit requirements remain through the roof, companies like McKinley will continue to feast on the poor and credit challenged.

Mike

Sun, Dec 30, 2012 : 11:06 p.m.

Gen Y is &quot;highly educated&quot; and votes democrat overwhelmingly. Elections have consequences, put on your crash helmet and enjoy the next four....................

GoNavy

Thu, Dec 27, 2012 : 10:43 p.m.

Thankfully taxpayers are shoveling more money into higher education grants &amp; loans to cover the increasing cost of higher education, which is caused by taxpayers shoveling more money into higher education grants &amp; loans.

leaguebus

Fri, Dec 28, 2012 : 5:13 a.m.

GoNavy, It's also caused by the state cutting funds to higher education every year as they mindlessly cut taxes every chance they get. It's also caused by the state laying off thousands of teachers and public safety people who used to pay taxes on relatively high incomes because of mindless tax cuts.

No amount of amenities and cultural opportunities is worth extreme struggle....period.

John

Fri, Dec 28, 2012 : 4:49 a.m.

http://en.wikipedia.org/wiki/Market_failure

lebron

Fri, Dec 28, 2012 : 12:25 a.m.

The market isn't overpriced if people will pay it. Simple supply and demand.

JRW

Thu, Dec 27, 2012 : 9:51 p.m.

&quot;If (a landlord) is going to do those improvements, they're going to advance their rent,&quot; he continued.
Is &quot;advance&quot; code for increase?

Greenradish

Fri, Dec 28, 2012 : 4:23 a.m.

It's not code, it's slang.

C.C. Ingersoll

Thu, Dec 27, 2012 : 6:13 p.m.

From 2011 AnnArbor.com:
http://www.annarbor.com/business-review/ann-arbor-office-vacancy-report-shows-improving-leasing-market/
&quot;On the leasing end, Hamilton said, more landlords are repricing their properties to reflect the availability of space. Some also are making more concessions. But the freefall in rental rates seems to have stemmed, he added.&quot;
We've seen several brand new highrises built; which should ADD to the vacancy rate. Don't believe the landlords when they decide to make up for lost revenue using any excuse they can muster...

Mike

Fri, Dec 28, 2012 : 2:29 a.m.

cc - &quot;make up for lost revenue &quot; your words are exactly right - landlords have been unable to raise rents but with a better economy comes higher rents and makig up for lost revenues. Thanks for making that point.............

JBK

Fri, Dec 28, 2012 : 2:12 a.m.

Say it plain - You raise some good points, BUT what you do is negotiate a month to month and continue to look. I moved 3 times within a 4 month period because I found a better property for a better price.

say it plain

Fri, Dec 28, 2012 : 12:31 a.m.

to some degree, really, they can all just get together and decide to make the rent higher...there are some people who have to be in Ann Arbor for whatever reason, and they will just have no choice. It helps when the media does half their gouging work for them, convincing people that there is somehow 'good reason' for increases...

Jack

Thu, Dec 27, 2012 : 5:22 p.m.

Rent is too damn high!
http://www.youtube.com/watch?v=x4o-TeMHys0

say it plain

Fri, Dec 28, 2012 : 12:28 a.m.

Mine too! :-)

Homeland Conspiracy

Thu, Dec 27, 2012 : 5:34 p.m.

He's got my vote

Mike D.

Thu, Dec 27, 2012 : 3:28 p.m.

Simple supply and demand theory, which is within the grasp of even this bleeding heart liberal, says that rents will go up if there are more people wanting to rent than there are available units. It also says that increased supply of housing will drive down rents. And yet we have people complaining that the influx of new housing is somehow driving rents up and driving residents away. Am I taking crazy pills? The problem is that we still make it so hard to build anything in Ann Arbor. We have whiners like Chris Crockett et al. who will complain about and delay ANY development. That, folks, is what keeps rents high.

Greenradish

Fri, Dec 28, 2012 : 4:22 a.m.

Hey, Mike. I'm a bleeding heart liberal as well and I totally agree with you on this one. I sure wish the City Council would be more practical about growth.
I say the city should judiciously deregulate parts of the zoning and development code downtown to let the housing supply grow. The land area of the city is big enough to welcome new faces without driving out the birkenstock crowd.
Last, I wish the affordable housing crowd would face the fact that today's new buildings will depreciate into tomorrow's affordable housing. Of course that's not the only way to make workforce housing, but its a darn good strategy that NIMBYs foreclose on when they object to building the volume of housing that suppliers and consumers could actually bear.

JBK

Fri, Dec 28, 2012 : 2:09 a.m.

Clownfish - A few high rises do NOTHING to free up housing when you consider 40k+ for undergrad, 10+ for graduate work, not to mention Law school and Med school. Those high righ rises might handle 600 to 700 students, BUT nothing compared to the overall need of the area.

clownfish

Thu, Dec 27, 2012 : 6:37 p.m.

What are those huge new buildings around downtown? Maybe I'm crazy, but I thought they were housing units?

Mike

Thu, Dec 27, 2012 : 5:11 p.m.

Mike D - I'm impressed with your logic, but it won't work in this town.................

Homeland Conspiracy

Thu, Dec 27, 2012 : 2:49 p.m.

Economic Low Income Cleansing...Let's price all the low income people out of town. If &quot;we&quot; can't see the low income people then there are NO low income people. Think of the high income children &amp; you having to explain to them about low income people. Worse yet the high income kids having to go to school with low income kids &quot;the horror, the horror&quot; Let's just ship them to Ypsilanti. Better yet let's make The People's Republic Of Ann Arbor a gated community. And only let the low income people work here but not live here. Boy I feel safer already.

GoNavy

Thu, Dec 27, 2012 : 10:46 p.m.

What low income students? Even the &quot;poor&quot; students come armed with tens of thousands of dollars of taxpayer money in the form of loans and grants.

walker101

Thu, Dec 27, 2012 : 2:18 p.m.

Supply and demand, along with no tax relief, along with the added 3% sales tax for sale of properties and increase in capital gains tax on rental properties tax and great economy whats a little increase in rent. Go Obama Care

JBK

Fri, Dec 28, 2012 : 2:03 a.m.

Clownfish - So did you know that we have more Americans by % on government assistance than ever before. The nanny state is well represented with food stamps, unemployment, children in poverty, unwed mothers, etc... The dollar drain on our society is unprecedented. 47% of ALL Americans pay NO Federal taxes. In fact, they actually get a refund check for doing &quot;nothing&quot;. Do us all a favor and put your head into a toilet and fluch twice. It is a long way to Wash D.C. ..........

Mike

Thu, Dec 27, 2012 : 9:33 p.m.

Clown - what is the point of talking about how low taxes are if you don't think they should be higher? Then you state you would be willing to pay an additional 2% of your AGI to help pay down the debt, so my assertion that you would like higher taxes for everyone is correct. You must think the debt is $16 billion instead of $16 trillion by offering only a measly 2% of your income (adjusted is even less). I'd be willing to pay more also but only if there are spending cuts. I see no cuts, so I am unwilling to pay. There are always caveats when you want to take someone's hard earned money from them, espescially money that will no longer be available to fuel the economic engine of this country because the government consumes it all. I'm afraid it may already be too little, too late..................The rich aren't going to save us from ourselves and the stupid politicians we have elected (including Bush)...................

clownfish

Thu, Dec 27, 2012 : 6:34 p.m.

Where did I say that, Mike?
I would have no problem paying an extra 2% on my GAI, if the country needs it to pay off debt. I am willing to do this so my kids won't have to. Are you willing to pas the debt along?
Your federal taxes have probably never been lower and you still whine? Is there any sacrifice you would be willing to make to help your country, or is it all on other people to pay down our debt? What would be wrong with setting the rates back where they were in the 90's?
Or should we Remember the thinking from 2002: &quot;Reagan proved deficits don't matter&quot;.

Mike

Thu, Dec 27, 2012 : 5:10 p.m.

Higher taxes for everyone says the clown....................

Homeland Conspiracy

Thu, Dec 27, 2012 : 2:50 p.m.

Please don't confuse them with &quot;FACTS&quot;

clownfish

Thu, Dec 27, 2012 : 2:37 p.m.

Did you know that federal tax rates are at their lowest point in 50 years? Did you know that probably 98% of people will see little to no increase in their taxes (other than the 2% that the GOP WANTS TO RAISE on wage earners) Did you know that cap gains taxes are lower than they were when Reagan was the president? Even if cap gains rates go up, they will probably still be LOWER than where Reagan set them in 1986. How many jobs did you create with your extra money?
&quot;There was, in fact, only one time that capital gains were taxed at the same rates that were paid by people who earned their money by working. That was during the years 1988 to 1990, as a result of the Tax Reform Act of 1986 — a law championed by President Ronald Reagan. Reagan's tax increase did not cause investment to fall, as many anti-tax ideologues had predicted. &quot;
So I see that an increase of 3% on sales of property could cause an increase of 10% for rent. Must be Obama!

racerx

Thu, Dec 27, 2012 : 2:18 p.m.

Wasn't there a story about this same subject a couple of years ago? Rent will increase yearly. So does it warrant another article? I swear I heard this same story not to long ago on these pages. What else is new?

G-Man

Thu, Dec 27, 2012 : 2:03 p.m.

Just because Realtors say values are going up doesn't make it so. The value increases we are seeing is caused by bidder competition on halfway decent condition foreclosed properties. The market for people living in their homes wanting to sell to someone to move in, is still stagnant at best. The sooner the liberal papers quit touting the so called &quot;price rise&quot;, the better we will be. I'm sure the Obama tax increases soon coming will surely help, right?

clownfish

Thu, Dec 27, 2012 : 2:25 p.m.

Where does Case Schiller come down on your &quot;liberal meter&quot;? It is they that the papers get their info from. Do you think having &quot;entertainers&quot; constantly poo-pooing the economy helps?

Craig Lounsbury

Thu, Dec 27, 2012 : 1:54 p.m.

Good for landlords, maybe not so good for retailers and bars and restaurants. Clearly as ones rent goes up ones discretionary income goes down unless income is rising at a faster rate.
This could result in a reduction of people boarding the choo choo train to Chicago on Friday afternoons.

Dog Guy

Thu, Dec 27, 2012 : 1:50 p.m.

&quot;The lower end of the housing market is already taken by those who can afford more but are making smart choices for their budget. Then, there's that many fewer units for folks who simply can't spend more,&quot; May we guess that a planned county ordinance will evict people from housing below their wealth? Ann Arbor already has an ordinance to confiscate rusty cars from streets and private driveways regardless of whether the owners can afford better. Socialism has gone upscale.

JRW

Thu, Dec 27, 2012 : 10:02 p.m.

I found that statement about people spending less than they can afford on housing quite stunning, actually. Who determines what someone can pay for housing? It's a private choice what anyone wants to pay for rent or what they can afford, or, heaven forbid, what they feel the VALUE is. Maybe, just maybe, someone pays based on what they believe the value of that particular housing situation is. People should pay for housing based on what they want to spend and what they feel they are getting for that money, not some idiotic notion of &quot;affording more&quot; but making other choices. Who determines who can afford more? Warren Buffet lives in a modest house in Nebraska and can certainly afford a mansion. That's his choice.

ItsTheTruth

Thu, Dec 27, 2012 : 2:33 p.m.

I live here because it's a nice place to live. Along with that comes higher taxes. If I wanted to see a rusty car up on blocks I would have stayed where I was living and paid less. I can afford a nicer place than I live in Ann Arbor but why should I fork over more money to live in a nicer house just so people who have rusty cars on blocks can move in?

Robert Granville

Thu, Dec 27, 2012 : 2:30 p.m.

You

Brad

Thu, Dec 27, 2012 : 2:14 p.m.

So how many cars have been towed from people's driveways so far? And if you want to have a nasty car on blocks in front of your house, move to the south.

Karen Hart

Thu, Dec 27, 2012 : 1:15 p.m.

It's &quot;Callan.&quot;

Lizzy Alfs

Thu, Dec 27, 2012 : 2:24 p.m.

Yes, thank you!

LXIX

Thu, Dec 27, 2012 : 12:49 p.m.

No lo yo.
Between 2010 and 2011 Ann Arbor gained about 991 people. UM added 858 students. If the UM hired 33 more people that year then all of Ann Arbor's growth would be accounted for.
In 2011 UM added another 792 students and this year piled on 710. If the trend continues at least two more highrises will have to be built every year to accommodate the new kids. That is assuming no one else like techies or young couples relocate here. With the density development, congestion, and abnormally high rent most without a high supporting salary will choose to move elsewhere besides Ann Arbor. Public schools will close, the Housing Authority and Food Gatherers will go. And Ann Arbor will starve out its remaining authors and artists. Treed town. Young families need not apply.
The UofM certainly did make this city what it is, and what it won't be.
Over the last decade these new kiddie abodes were added downtown-
Construction units beds
Ashley Mews 55 -
Cornerhouse Lofts 42 -
Liberty Lofts 60 -
Metro Lofts 14 -
City Place 24 144
Ashley Terrace 93 -
Zaragon Place 66 248
411 lofts 96 343
Zaragon West 99 199
Landmark 173 600+
---and maybe---
Ann Arbor City Apts 155 -
Varsity 100 400
====
The State of Michigan lost around 7000 people in that same period - one of only two states to do

LXIX

Thu, Dec 27, 2012 : 1:13 p.m.

so.
Yes. that should be 133 new hires not 33.
One day a bright bean counter (or an engineer from MIT) will discover that Universities can increase enrollment ten-fold without ever having the students visit campus. A new technology called the internet and remote education or even teach online. Party in Cancun will earning your degree from MIT or Harvard.. Teach the next generation of physicists from the comfort of your own Colorado ranch house.
Naw. That would be too ridiculous. If it were possible the UM would already be on it.

John

Thu, Dec 27, 2012 : 12:11 p.m.

&quot;'Our rents were pretty flat and in some locations, actually went down since 2008,' said Amy Khan of CMB Property Management in an email&quot;
That's funny, because our rent went up considerably a year ago. Excuse me while I burn all the money I don't have.

leaguebus

Fri, Dec 28, 2012 : 4:57 a.m.

You are right Mike about the government eating up all of our money, that must be why the Walton family has more money than the lower 40% of all the people in the country. That must be why Romney paid 14% on the year he released and nothing in the years he didn't release. That must be why middle class salaries have stagnated for the last 20 years and the people at the top of the salary ladder have increased their wealth by a huge amount.

John

Fri, Dec 28, 2012 : 4:43 a.m.

Mike, I never said it didn't concern me at all, just that it has little to no bearing on my current or immediate future vis-a-vis my local rental rates and the share of my income they speak for, which is all this article is about, and thus it seems logical to confine comments to that, and not stupid partisan political talking points.

Mike

Thu, Dec 27, 2012 : 9:43 p.m.

John, you choose to take the bus to work, that is not an option for me. You choose to own one car and live close to a bus line; good for you. Not everyone can be as smart as you are John, you obviously have it figured out. The government has racked up $16 trillion in debt and borrows .46 of every dollar they spend and they don't concern you; that is amazing. When will it start to bother you? It sounds like you do need a pay raise because you are complaining about the high cost of rent or do you just like to complain in general? Some people want to solve problems, other people just pretent they don't exist and justify a bloated federal government as not being oppressive. They're taking your money John and giving you very little in return, remember 46% of the money they spend is money they don't have, and you think that is just fine and worry about your rent. In the scheme of things your rent is nothing..................

actionjackson

Thu, Dec 27, 2012 : 7:12 p.m.

Mike, what do you suggest to do about this situation?

John

Thu, Dec 27, 2012 : 5:50 p.m.

Sorry, Mike, not buying it. My taxes are not oppressive, and represent one of the lesser shares of my expenses relative to my income. Rent is #1 on my list of annual life expenses, by a wide margin. I do not require a pay raise, either. I am well compensated for the work I do relative to the market niche I inhabit. Gas is so far from my concerns it's not even on the radar. I take the bus most days, and we only have one car between my spouse and I. The federal govt is the least of my worries when it comes to my local rental rates, my friend.

Mike

Thu, Dec 27, 2012 : 5:08 p.m.

You can thank the federal government fr the lack of money in your pocket. They consume most of the wealth in this country which doesn't leave much for you to get a pay raise or better benefits. Keep voting for guys like Dingell, Stabenaw, and Levin. They'll soon get it ot the point where you cn't vene afford food. They are devaluing the dollar by printing motre and more of them. As they do that items which are purchased with a dollar like gasoline and food cost more because you are paying with dollars that are worth less. Understand??????? There is a surplus of oil which should normally bring gas prices down but you are buying that gas with currency that is becoming worth less and less every day.

Tom Todd

Thu, Dec 27, 2012 : 11:47 a.m.

Capitalism if someone can squeeze another dollar out of you they will.

Mike

Fri, Dec 28, 2012 : 2:26 a.m.

JBK and CC - insurance goes up every year, overhead for the home office goes up every year- I assume you have heard of Obamacare and it's cost implications for businesses?, maintenance costs never cease to increase on rental properties, bad economies and deadbeat tenants protected by laws favoring renters eat into the bottom line more and more, people wreck rental properties beyond the security deposit collected - so in sum it is not just to collect higher profits...............You guys should become landlords until you go broke doing so.......................

JBK

Fri, Dec 28, 2012 : 1:50 a.m.

CC - You are correct! Prop taxes did not move. I own a home and nothing has changed beyond nickel and dimes. Utilities have actually gone down due to the very warm winter last year. Natural gas is stockpiled right now. So in sum, any raise in rent is for profit only. It has NOTHING to do with covering costs........:)

C.C. Ingersoll

Thu, Dec 27, 2012 : 6:01 p.m.

Did the property taxes go up this year? I must have missed that. Or the sales taxes? I haven't seen any increase in utility costs either, so unless your maintenance personnel suddenly decided to unionize I have a hard time seeing any of this Mike...

Mike

Thu, Dec 27, 2012 : 5:03 p.m.

Socialism - I suppose they should just be nice and absorb the increases in taxes, maintenance, and utility costs.